Learn · Reading the numbers
What is IPO GMP and how to read it
By InvestorTrack team · Last reviewed · 7 min read
GMP stands for grey market premium. It is the amount, per share, that people in an unofficial market are willing to pay over the issue price for an IPO's shares before they list. It is the number most applicants look at to guess how an IPO might open, and also the number most often misunderstood. This guide explains what it is, how to read it and where its limits are.
What the grey market is
Between the day an IPO opens and the day its shares list, the shares do not trade on any exchange. In that gap, some dealers quote prices for the shares, or for the right to the allotment, informally. This informal market is called the grey market. It is unofficial: it is not run by the exchanges, not reported by the company and not regulated by SEBI.
The premium is the difference between the grey market price and the issue price. If the issue price is ₹150 and the grey market is quoting ₹180, the GMP is ₹30. If it is quoting ₹140, the GMP is minus ₹10, a discount.
How to read a GMP
The percentage is easier to compare across IPOs than the rupee figure. A ₹30 GMP on a ₹150 issue is a very different signal from ₹30 on a ₹900 issue. Our GMP pages show the rupee figure, the percentage and the implied listing price together, with the history of how the GMP moved. The GMP calculator turns a GMP into rupees for the lots you applied for.
Why the GMP moves
- Demand. As the subscription builds, particularly in the QIB and HNI categories, the grey market tends to price in more demand.
- Market mood. A falling stock market can drag GMPs down within hours, and a strong one can lift them.
- News about the company or the sector.
- Thin trading. A few large deals can move the quote, which is one reason GMP is noisier for small and SME issues.
The quote can change several times a day and can differ between dealers, so a single number is only a snapshot. That is why we show a history and say when it was last read.
What GMP cannot tell you
- It is not the listing price. The real listing price is set by the exchange's opening session on listing day, and it often differs from issue price plus GMP, above or below.
- It is not verified. Nobody checks the quotes, and some may be made to influence opinion.
- It is not about allotment. A high GMP does not make you more likely to get shares. It usually means more people want them, which makes allotment harder.
- It says little about the business. A company can list well and be weak, or list flat and be strong.
How reliable has GMP been?
Rather than guess, we measure it. For each IPO we tracked through to listing, our GMP track record puts the last GMP before bidding closed next to the price the shares actually opened at, and shows how often the direction was right and how far off it was on average. The sample grows with every listing, and it describes the past, not the next IPO.
Common mistakes
- Treating GMP as guaranteed profit. It is not, and you may not be allotted shares at all.
- Comparing rupee GMPs across IPOs with different issue prices, rather than percentages.
- Reading an old figure. Check when the GMP was last updated.
- Forgetting costs. Brokerage, charges and tax on a gain come off any profit.
- Ignoring the subscription. A high GMP with weak demand in the key categories is a mixed signal.
Frequently asked questions
What does GMP mean in an IPO?
GMP means grey market premium: the extra amount per share that the unofficial grey market quotes over the IPO's issue price before the shares list.
Is GMP the same as the listing price?
No. Issue price plus GMP is only an implied price. The real listing price is decided on listing day and often differs from it, in either direction.
Can GMP be negative?
Yes. A negative GMP means the grey market is quoting the shares below the issue price, a discount.
Is GMP legal and reliable?
The grey market is unofficial and not regulated by SEBI or the exchanges, so its quotes are unverified. Use it as one indicator and check the offer document for the facts.
Where can I see how accurate GMP has been?
On our GMP track record page, which compares the last GMP before bidding closed with the actual listing price for every IPO we tracked through to listing.